The Marketplace for Critical Illness Coverage

Presented by : Jerry Jacobs, CLU

5416 Yale Street

Metairie, Louisiana 70003

Ph#(504)888-2242 Fax#(504)889-1753

8301 Delmar, #2W

St. Louis, Missouri 63124

Ph#314-997-0751 Cell(504)237-8710

Email: jerry_in_metairie@msn.com

AGENDA

Introduction What is Critical Illness

Insurance? U.S. Marketplace Trends Need for Critical Illness

Protection Product Design

Marketing Applications Global Perspective U.S. Critical Illness

Marketplace Q&A/Discussion – Open

Forum – Issues/Concerns

Approximately 1.5 million Americans suffer a heart attack each year.

Of these, 1.1 million survive at least three (3) years.

Over 40% of the population will develop breast, prostate, or some

form of cancer at some point in their lives.

The probability of surviving a critical illness before age 65 is almost

twice as great as dying.

Source: 1987 Employee Benefits News And Views Magazine

FACTS

What Is Critical Illness Insurance?

Critical illness insurance (C.I.I.) has characteristics of both life insurance and health insurance.

C.I.I. pays a life insurance-type lump sum benefit, upon diagnosis of one of a number of critical illnesses rather than upon death.

C.I.I. Coverage

C.I.I. will pay a lump sum benefit after the insured is diagnosed with a critical illness. Virtually all products cover the “Big Three”:

Heart Attack

Stroke

Life Threatening Cancer

Nearly 70% of all deaths under age 75 are associated with heart disease, stroke and cancer.

The “Big Three”Heart Attack

• Death of a portion of the heart muscle (myocardium) from a blockage of one or more

coronary arteries.Stroke

• Any acute cerebrovascular accident producing permanent

neurological impairment resulting in at least thirty (30) days of paralysis or other measurable neurological deficit.

The “Big Three”

Life Threatening Cancer

• Only those types of cancer shown by the presence of a malignancy identified by the uncontrolled growth and spread of

malignant cells and the invasion of tissue that could result in death.

World Growth Concept developed by Marius Barnard

Introduced South Africa in 1980s

• United Kingdom

• Japan

• Continental Europe

• Australia

• Canada

• Ireland

• United States

U.S. Marketplace Trends

Medical technology is keeping people alive longer

The concern today is not dying too soon – it’s living long

People Living Longer

65 year old male can expect to live to age 83

65 year old female can expect to live to age 87

Attitudinal Trends

Consumers have greater fears than premature death, such as:

• The cost of health care

• Cost of nursing homes

• Having enough income to retire

LIFE INSURANCE INDUSTRY TRENDS

Demographics favor living benefits over death benefits

THE RESULT: Individual life sales have declined

30% over the past ten (10) years.

Source: Marketing Edit LIMRA 1997

Why C.I. Coverage?

Probability of surviving C.I. before age 65 is almost twice that of dying

Costs associated with C.I. are not covered by traditional insurance

Why C.I. Coverage? EXAMPLE: Two-thirds of all cancer-related costs are indirect,

non-medical expenses, such as:

• Lost income for C.I. Survivor

• Lost income and work time for spouse or care giver

• Housekeeping and child care expenses

• Home health care needs

• Home or car modifications

• Non-covered experimental treatments

• Expenses not covered by insurance (including co-payments

and deductibles)

If you survive a critical illness, what will you do?

Disability Insurance – pays a percentage of the sufferer’s

monthly income and benefits are dependent upon ability to

work.

Long Term Care – limited to a daily benefit available subject

to a hospital stay or home nursing requirements.

Accumulation Products – intended to provide supplemental

retirement income.

If you survive a critical illness, what will you do?

Disability Insurance – pays a percentage of the sufferer’s

monthly income and benefits are dependent upon ability to

work.

Long Term Care – limited to a daily benefit available subject

to a hospital stay or home nursing requirements.

Accumulation Products – intended to provide supplemental

retirement income.

Critical Illness Insurance

Insured has options

The money provided by the C.I.I. empowers the insured

to exercise choice.

C.I.I. is a consumerist product

Family/Individual Perspective

Replace reduced earnings

Pay off personal debts

Cash for medical treatment or associated expenses

Education or Retirement

Business Perspective Buy/Sell Agreements

• Provide ill shareholder with benefit

• Enable working shareholders to buy out ill shareholder

Key Person

• Pay off creditors

• Executive perquisite

• Recruit replacement with similar talent

C.I.I. ProductCritical Illness Insurance is Flexible

Life

Health

Disability

Other products

Open Forum – Issues/Concerns